International Paper has notified Graphic Packaging Holding Company of its intent to begin the process of reducing its ownership interest in Graphic Packaging International Partners, LLC. Per the agreement, Graphic Packaging will purchase approximately 15.1 million partnership units from International Paper for $250.0 million. As a result, International Paper’s ownership interest in the partnership will decrease from approximately 21.6% to 18.3%. International Paper has the contractual right to continue to reduce its minority ownership interest in the partnership every 180 days with the next potential transaction date in July 2020, subject to modification by the parties.
In addition, Graphic Packaging has reached an agreement to acquire a folding carton facility from Quad/Graphics, Inc. for $40.0 million, subject to standard closing conditions. The approximately 400,000 square foot converting facility is strategically located in Omaha, Nebraska, close to many existing food, beverage and industrial customers. The business generates approximately $75 million in revenue, consumes roughly 40,000 tons of paperboard, and is expected to generate approximately $7 million in annualized EBITDA including synergies over the next 24 months. The anticipated close date for the transaction is January 31.
The acquisitions were announced in Graphic Packaging’s fourth quarter and full year 2019 earnings report. The company reported net Income for fourth quarter 2019 of $33.0 million, or $0.11 per share, based on 291.7 million weighted average diluted shares. This compares to fourth quarter 2018 net income of $47.5 million, or $0.15 per share, based on 306.8 million weighted average diluted shares. For the full year 2019, net income was $206.8 million, or $0.70 per share, based on 294.8 million weighted average diluted shares. This compares to 2018 net income of $221.1 million, or $0.71 per share, based on 310.1 million weighted average diluted shares.
Michael Doss, President and CEO said, “We are very pleased with our performance and execution in 2019, as well as the positive momentum we have entering 2020. In 2019, we continued to build on our paperboard packaging leadership position by investing in our operations and in our people, successfully executing strategic M&A, capturing performance gains and setting the stage for net organic volume growth. Full year 2019 Adjusted EBITDA increased 6.1% to $1.03 billion, driven primarily by pricing actions and our performance initiatives. We expect to generate 100 to 200 basis points of sustainability supported net organic volume growth in 2020, driven by conversion of new and existing customers to our paperboard packaging solutions. Graphic Packaging is well-positioned to achieve another year of improved profitability and growth.”